There are big gaps in the costs of closed-ended investment trusts listed in the UK, with some setting total expense ratios as low as 0.36 per cent while other more specialist funds in illiquid sectors charge up to 6 per cent or more, annual figures showed yesterday.

The total expense ratio, which is a measure capturing the management and trading costs on a fund, is a typical measure of how expensive it is to manage funds and can be heavily influenced by factors such as the liquidity and efficiency of a market. When compounded over time, TERs bite significantly into returns.

Data from the Association of Investment Companies, a UK trade group, showed that 62 per cent of funds, according to Lipper data, set a TER, as a percentage of net asset value, of under 1.5 per cent and 31 per cent have TERs of less than 1 per cent.

The average TER on such funds is 1.7 per cent, based on data to November last year, compared with 1.76 per cent in January 2010, the AIC said. When performance fees are added, the average TER is 1.82 per cent.

But the figures show a wide divergence between fund sectors. At 5.87 per cent, the Property Specialist category of fund has the highest TER in the AIC survey, contrasting with funds as low as 0.58 per cent (North America funds).